In the sale of residential and commercial property, more generally real estate, it is common for buyers and mortgagors to purchase title insurance, a special type of insurance that protects buyers and mortgage banks from financial losses that stem from defects in the title (ownership records) of property. The pricing of title insurance is one of a host of items that affect the closing costs of real estate transactions.
In recent years, the mortgage banking industry came under fire for allegedly baiting prospective home buyers with low closing-cost estimates and then presenting higher closing costs at the closings, a time when many buyers were invested in completing the transaction and likely to pay the higher costs rather than delay the transaction to find a lower cost title company or different mortgage bank. Moreover, in some instances, title companies were affiliated with or otherwise quietly collaborating with the mortgage banks in a manner that suggested consumers were being treated unfairly.
To protect consumers, laws were enacted not only to require that mortgage banks allow consumers to choose which title companies they use, rather being required to take the one provided by the bank, but also to ensure greater accuracy in closing-cost estimates generally and title-insurance estimates particularly. Indeed, the laws can result in mortgage companies being held liable for excessive underestimation of closing costs.
As the mortgage and real estate industries have adapted to the new regulations, the present inventor has recognized at least three problems. One is that choosing a title insurance company is a complex endeavor and many consumers, even with the power of Internet search engines, such as the GOOGLE™ search engine, are not well equipped to distinguish one from another in terms of quality of product or experience. Two is that mortgage loan officers are now engaging with wider variety of title insurers than previously, some of which they may not have trusted relationships and which may put them at risk of being liable for the title insurance estimation errors. Indeed some mortgage banks make individual loan officers responsible for payment of the amount of any excessive underestimation. Three is that the business of title insurance is more competitive than ever. Although this is good news for consumers, it poses challenges to title insurance companies seeking to maintain or grow their businesses.
Accordingly, the present inventor has recognized a need to improve how consumers select title insurance companies, how loan originators work with title insurance companies, and how title insurance companies compete for business.